Sri Lanka’s economic growth may drop to 3 percent

April 7th, 2009 - 3:58 pm ICT by IANS  

Colombo, April 7 (IANS) Making a gloomy economic forecast, Sri Lanka’s Central Bank said Monday that economic growth rate might drop to as low as 3 percent in 2009 from 6 percent in 2008 if adverse conditions persist.
Releasing the annual report for 2008, the bank said that despite unprecedented and unfavourable developments globally and domestically, the Sri Lankan economy has “demonstrated its resilience by recording a growth of 6 percent for 2008″.

“We are very optimistic that the economy would grow between 4.5 percent and 5 percent in 2009, but at a more pessimistic scenario, it would grow between 2.5 percent and 3 percent,” Central Bank Governor Ajith Nivard Cabraal said.

He said Sri Lanka managed to achieve the 6 percent growth under “very challenging scenario” and predicted that the end of war against the Tamil Tigers would herald immense opportunities to boost the economy.

“The end of the war will be looked at positively by foreign investors. We are at crossroads, notwithstanding global developments,” he said.

Sri Lanka’s economy posted 6 percent growth in 2008, down from 6.8 percent in 2007.

Economic experts say the cost of the government’s military campaign against the Liberation Tigers of Tamil Eelam (LTTE) has hurt the economy over the past one decade. The defence budget is projected at $1.6 billion this year.

President Mahinda Rajapaksa Sunday announced that the military drive against the LTTE was “about to end” and urged the rebel leaders to free thousands of civilians and surrender to the security forces to avoid annihilation.

The LTTE has been fighting to carve out a separate state in the island’s northeast over the past quarter century.

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